10-QPeriod: Q1 FY2023

LINDE PLC Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 27, 2023For Securities:LIN

Summary

Linde plc reported strong financial performance for the first quarter of 2023, demonstrating significant year-over-year growth in both reported and adjusted metrics. Sales remained relatively flat year-over-year at $8,193 million, but this was a result of various offsetting factors including currency headwinds and divestitures, which were counterbalanced by strong price attainment and acquisitions. The company showcased robust operating profit growth of 31% on a reported basis and 16% on an adjusted basis, driven by effective pricing strategies and productivity initiatives. Profitability metrics saw substantial improvements, with reported diluted EPS rising 33% to $3.06 and adjusted diluted EPS increasing 17% to $3.42. This performance underscores Linde's operational efficiency and its ability to navigate inflationary pressures. The company's strategic focus on pricing and cost management, coupled with contributions from acquisitions like nexAir, contributed to these positive results across its segments, particularly in the Americas and EMEA regions. The company also maintained a strong liquidity position with substantial cash on hand and undrawn credit facilities.

Financial Highlights

52 data points
Beta

Revenue

$8.19B

Net Income

$1.52B

18.5% Net Margin

EPS (Diluted)

$3.06

Total Assets

$80.31B

Cash & Equivalents

$4.96B

Free Cash Flow

$1.08B

Financial Statements
Beta
Revenue$8.19B
R&D Expenses$36.00M
SG&A Expenses$822.00M
Operating Income$1.93B
Net Income$1.52B
EPS (Basic)$3.08
EPS (Diluted)$3.06
Shares Outstanding (Basic)491.82M
Shares Outstanding (Diluted)495.68M

Key Highlights

  • 1Reported operating profit increased by 31% to $1,933 million, driven by higher pricing, productivity gains, and lower depreciation/amortization.
  • 2Adjusted operating profit grew by 16% to $2,206 million, showcasing the company's ability to drive core operational improvements.
  • 3Diluted EPS surged by 33% to $3.06 on a reported basis, and by 17% to $3.42 on an adjusted basis.
  • 4Sales remained stable at $8,193 million, with significant price attainment (+8%) offsetting currency impacts (-3%), divestitures (-2%), and engineering segment declines (-26%).
  • 5The Americas segment showed robust growth with a 10% increase in sales and a 13% increase in operating profit, bolstered by the nexAir acquisition.
  • 6The EMEA segment reported a 1% sales increase and a strong 21% rise in operating profit, primarily due to higher pricing and productivity, despite currency headwinds.
  • 7Capital expenditures increased significantly to $829 million, reflecting investments in new plant and production equipment, while share repurchases continued, albeit at a lower pace than the prior year.

Frequently Asked Questions

The substantial increase in operating profit, both reported and adjusted, was primarily driven by effective price attainment across all geographic segments, which contributed 8% to sales. Additionally, productivity initiatives and a reduction in depreciation and amortization (largely due to merger-related intangible assets on a reported basis) significantly boosted profitability. These gains more than offset inflationary pressures and currency headwinds.

Currency translation had a negative impact on sales, decreasing them by 3% in the first quarter of 2023. Key currencies like the Euro, Chinese yuan, British pound, and Australian dollar weakened against the U.S. dollar, affecting reported revenues. However, Linde's pricing strategies helped to mitigate some of this impact on operating profit.

Linde uses adjusted financial measures (such as adjusted operating profit, adjusted net income, and adjusted EPS) to provide a clearer view of the company's ongoing operational performance by excluding items that are not considered indicative of its core business trends. These exclusions typically include purchase accounting impacts from the Linde AG merger, other charges, and gains/losses on business sales. These non-GAAP measures are intended to supplement, not replace, the GAAP financial statements, offering insights into profitability and performance trends on a more consistent basis.

The filing states that Linde provides quarterly updates on operating results, material trends, and financial guidance through its earnings releases and investor teleconferences. These updates are available on the company's website (www.linde.com) but are not detailed within this 10-Q report itself. Investors should refer to those releases for specific forward-looking guidance.